Financial Accounting
Semester 1 · 14 topics in 5 units
Unit I 4 topics
- Accounting: meaning, definitions, objectives, functions and limitationsWhat accounting is, the AICPA and AAA definitions, book-keeping distinguished from accounting, the objectives and functions of accounting, its users and branches, and its limitations.5 min
- Accounting concepts and conventionsThe basic assumptions on which accounts are kept (business entity, money measurement, going concern, accounting period, cost, dual aspect, realisation, accrual, matching) and the conventions that guide their presentation (consistency, disclosure, conservatism, materiality), each with an example.5 min
- Double entry system, types of accounts and the rules of debit and creditThe double entry system and its advantages, single entry distinguished, the three kinds of accounts with the golden rules (English approach), the five-way classification with its rules (American approach), and the classification problem worked out.4 min
- Introduction to accounting standards: AS and Ind ASWhat accounting standards are and why they are needed, the Accounting Standards Board of ICAI, the legal force given by sections 129 and 133 of the Companies Act 2013 and the role of NFRA, the list of AS with four explained in detail, and Ind AS converged with IFRS.6 min
Unit II 4 topics
- The journal: format, rules and journal entries workedWhat the journal is, its ruling, simple and compound entries, how to decide the debit and credit, the treatment of goods, cash and credit transactions, discounts and settlements, with the Govind (January 2026) and Ajit (June 2025) problems journalised.4 min
- Subsidiary books: purchase book, sales book and returns booksWhy the journal is subdivided, the kinds of subsidiary books, what goes into the purchase and sales books, trade discount against cash discount, posting the totals, and the November 2019 rice, tea and sugar problem (January 2026) worked out.4 min
- The cash book and the three-column cash bookMeaning and features of the cash book, its kinds, contra entries, discount columns and how they are posted, cheques received and deposited, with the March 2025 (January 2026 paper) and June 2012 problems balanced.5 min
- Ledger, ledger posting and the trial balanceThe ledger, posting and balancing accounts, journal distinguished from ledger, the trial balance with its objectives, methods, format and limitations, trial balance distinguished from balance sheet, and the March 2020 ledger problem posted and tested by a trial balance.5 min
Unit III 2 topics
- Final accounts of sole traders: manufacturing, trading, profit and loss account and balance sheetWhat final accounts are, the manufacturing account with a worked cost of production, the trading account and gross profit, the profit and loss account and net profit, the balance sheet with marshalling and classification of assets and liabilities, and Rajan's trial balance (January 2026) taken to final accounts.5 min
- Final accounts with adjustmentsWhy adjustments are made, the double effect of each (closing stock, outstanding and prepaid expenses, accrued and advance income, depreciation, bad debts and provision for doubtful debts, interest on capital and drawings) with adjusting entries, the Rs. 2,69,030 trial balance (January 2026) fully solved, and the Rs. 1,37,000 problem answered.5 min
Unit IV 3 topics
- Capital and revenue expenditure and receiptsThe tests that separate capital from revenue expenditure, deferred revenue expenditure, capital and revenue receipts, capital and revenue profits and losses, why the distinction decides the profit, and the January 2026 classification list solved.4 min
- Non-trading concerns: receipts and payments account, income and expenditure account, capital fundWhat non-trading concerns are and the final accounts they prepare, the receipts and payments account and the income and expenditure account compared, the capital fund and how it is calculated, the treatment of special items, and the Manjunatha Charitable Trust receipts and payments account (January 2026) prepared.4 min
- Income and expenditure account and balance sheet: problems solvedThe steps for turning a receipts and payments account into an income and expenditure account and balance sheet, the cricket club problem set in both January 2026 papers solved in full, and the literacy organisation problem (June 2025) with subscriptions, interest accrued and sale of furniture.4 min